How Fee-for-Service is Changing And How To Be Prepared

How Fee-for-Service is Changing And How To Be Prepared

Over the course of the last 50 years, healthcare payment models have ebbed and flowed through administration changes, policy shifts, and the evolution of Medicare. However, through it all, the basic premise remained largely the same: Doctors are paid based on the volume of services provided with little to no incentive tied to positive outcomes or quality of care. Although the industry is shifting away from fee-for-service payments in favor of value-based care, volume-dependent models were still used by 73 percent of healthcare organizations as recently as 2016.

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In an article for Forbes magazine, Dr. Robert Pearl says “For its many users, healthcare’s fee-for-service reimbursement methodology is like an addiction, similar to gambling, cigarette smoking and pain pill abuse. Doctors and hospitals in the clutches of this flawed payment model have grown dependent on providing more and more healthcare services, regardless of whether the additional care adds value.”

Because, for decades, doctors have been paid based on volume, they have come to rely on the idea that the more they do, the better they are serving their patients. In essence, they have been rewarded for bad habits. Dr. Peal goes on to say “It’s not that providers don’t understand the benefits of getting paid for the value of their care. Rather, the rewards of their habit and the pain of quitting it within the context of American healthcare are simply too great.”

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But the reality of the financial and health consequence of the fee-for-service model is reaching a point of no return. The cost to individuals, companies and our country are become oppressive. In 2016, U.S. healthcare costs reached 3.3 trillion, and in 2015 the Kaiser Family Foundation found that there were 1 million adults who declared medical ​bankruptcy— more than those going bankrupt for unpaid credit card debt or mortgage defaults.

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The shift to value-based car has become inevitable, and to be successful in the new landscape, providers should understand how it is change and how to keep ahead of the curve.

Why Fee-for-Service Doesn’t Pay

1. Improved Audit and Compliance Programs

Despite being the long-established standard for medical payment models, fee-for-service has more recently come under scrutiny by the Centers for Medicare and Medicaid Services (CMS), based on the likelihood of improper payments. Starting in 2015, CMS created the Medicare Fee-For-Service Recovery Audit Program with the goal of recouping overpayments made under a fee-for-service model. The program is routinely updated to include additional topics for review, amassing nearly one hundred topics in the 2018 update.

2. Documented Inefficiencies

A recent report indicated that Medicare Advantage (MA) programs succeeded in lowering medical costs while producing better outcomes when compared to Medicare-Fee-For-Service, despite having a larger population of at-risk patients. The study, which analyzes both programs based on patient population, average outcomes, and overall cost of care, concludes that volume-based payment models are largely ineffective due to a lack of preventative care measures associated with chronic illnesses, such as diabetes.

Staying on Top of the Changes

Operating under a fee-for-service payment model rather than value-based care doesn’t change the fact that the CMS prioritizes fewer readmissions, improved preventative care, and reducing the cost of healthcare. Providers that do not make significant efforts to improve patient care in between visits could be at risk of financial penalty and subject to patient attrition as patients across the country are prioritizing their healthcare experience. In order to stay relevant, fee-for-service organizations are at least obligated to retain patients through improved patient engagement tactics and take steps to prevent avoidable readmissions. Providers have the opportunity to do both, while keeping costs to a minimum, by implementing improved patient engagement strategies.

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No-shows are a reality for every organization and provide one area for improvement that provides a quick return on investment. A simple SMS messaging reminder has been proven to decrease rates by an average of 5-12 percent, and as much as 42%. Mobile use continues to grow across every demographic in the United States and is quickly becoming a preferred method of contact. Text messages have a 98% open rate, making them a more effective mode of communication than email or patient portals.

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Providers can also leverage mobile technology for improved patient education. Automated text-based programs can empower patients to prioritize healthy day-to-day choices, including managing chronic illnesses and choosing healthier food options. Providing easily comprehensible, pre-translated words of advice and encouragement can have an immediate impact on the ongoing health of every patient.

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Preventative outreach is another area where providers can leverage improved patient engagement to enable better outcomes. By using text messages, providers can easily fill preventative care appointments and help minimize the impact of chronic disease. Closing these gaps in care will not only lead to healthier patients, but will also provide opportunities for organizations to take advantage of special bonus payments tied to value-based metrics.

While the fee-for-service model has dictated the way providers deliver care for over a century, the complexity of today’s patient conditions and treatments are necessitating a shift in payment structure. The cost and health implications of treating the disease and not the patient have become to great. To successfully make the shift to a more patient-centric approach, providers will need to change the way that they engage with their patients, both inside and outside the walls of the health center.

To learn more about improving patient engagement within a fee-for-service model, use the form below to connect with the CareMessage team.

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CareMessage empowers healthcare providers through mobile technologies to reduce costs and improve outcomes by communicating more effectively with underserved populations.